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Nikos Kargadouris Opalesque Geneva for New Managers: According to the hedge fund managers at London-based Balliol Road Investments, buying collateral and payment network assets like Bitcoin should become a national strategic priority.
"Distributed Ledger Technologies (DLTs) are rapidly becoming the technological foundation of a new class of next-generation financial infrastructure," says Nikos Kargadouris. "We are still at the nascent stages of an innovative revolution where transactional costs will become cheaper and faster with instant settlement. Assets will continue to get tokenized and royalty rights across a wide range of NFTs will be preserved and monetized."
The utility proposition and applications of DLTs are aimed at solving real-world problems in a manner we have never seen before, he adds.
Kargadouris is a partner at Balliol Road Investments LLP, which he founded in June 2019 together with Vassilis Paschopoulos. The partners have invested in the digital assets space for some years on a personal level and have been running a digital asset-related sub-strategy for their macro hedge fund, BRI Opportunities Fund, since October 2020. They have recently launched their second hedge fund, BRI Digital Assets Fund, which is focused exclusively on digital assets and aimed at professional investors. "As early Bitcoin adopters, we bring our know-how of traditional macro investing to an ecosystem we already understand," he says.
Nikos Kargadouris will be speaking at the Small Managers - Big Alpha Episode 7 webinar on March 8th.
Bullish outlook with 5G and more mobile devices
Balliol Road's outlook is extremely bullish as the underlying infrastructure is further supported by two fundamental drivers that are unfolding, he explains to Opalesque. Firstly, there is the ongoing deployment of 5G networks that offer significantly faster online connectivity. Secondly, there is an exponential growth in mobile devices. It is estimated there will be 200 billion mobile devices by 2030, up from c. 30 billion last year.
Regulation and game theory to play major roles
The partners' thesis is consistent with their current macro outlook. Indeed, apart from mass adoption which is already happening, regulation and game theory will play major roles going forward.
They expect to see clearer regulation soon, he explains, which will allow larger investors to deploy more capital in furthering innovation, subsequently driving volatility lower across the board.
As for game theory, it is in full effect, Bitcoin being the prime example, he continues. "Non-reserve currency nation-states will be forced to adopt, and the country that adopts last will lose. The current situation in Europe is evidence of this."
Macro events are showing Bitcoin's usefulness
"We have just witnessed a European sovereign state, with very close ties to the EU and NATO, request help via donations in crypto," Kargadouris says. "It's already happening."
"Moreover, the severity of global sanctions imposed begs a serious question. Could the USD/SWIFT hegemony long dictated by the US and NATO be coming to an end? Buying collateral and payment network assets like Bitcoin becomes a national strategic priority."
From a pricing perspective, correlation to equities is currently high but the partners think this is about to change. Systematic and algorithmic strategies treat Bitcoin as a risk asset but, fundamentally, macro events are showing Bitcoin's utility as an alternative financial system.
Ukraine and oligarchs
Ukraine has received more than $29m in crypto donations, reports Crypto Briefing. On Saturday, Ukraine's official Twitter account posted a request for Bitcoin, Ethereum, and Tether donations. So far, the official addresses posted for donations have received over $4.6m in Bitcoin and around $7m in Ethereum, Tether, and other digital assets. In addition, the Ukrainian non-profit organisation Come Back Alive, which was founded in 2014 following the Russian annexation of Crimea, raised over 188 Bitcoin, currently worth around $7.2m, over the last five days.
Some papers have suggested that Russian oligarchs might use cryptocurrencies as a potential safe haven. However, because of the technology for tracking and screening wallets from sanctioned countries, changing cryptocurrency to dollars on a centralized exchange is not easy.
BRI Digital Assets Fund
Balliol Road's BRI Digital Assets Fund is a liquid digital assets hedge fund strategy that seeks to capture the value proposition of the next generation of champions within the ecosystem. It invests in publicly listed digital assets and related instruments via an institutional framework that uses best-in-class counterparties for the highest level of security whilst mitigating the drawbacks of self-custody. The Fund was launched in late January 2022. It is held under the Sturgeon Ventures umbrella.
The Eurekahedge Crypto-Currency Hedge Fund Index returned 140% in 2021 - after returning 200% in 2020. It is currently down 18% YTD.
Upcoming webinar:
Small Managers - BIG ALPHA Episode 7
Episode 7 of this ground breaking webinar series presents you another carefully screened panel of investment managers:
• Bas Emmerig, Savin Funds
• Nikos Kargadouris, Balliol Road
• Laurent Jeanmart, Katch Investment Group
• Kemp Niklin, Rotella Capital Management
When: Tuesday, March 8th 2022, at 10:30 am ET
Free registration: www.opalesque.com/webinar/
Related article:
21.Jan.2022 Opalesque Exclusive: Former partners join again and launch global macro and digital asset hedge fund
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